Q4 Earnings: Tech Expected to Remain Growth Driver

Zacks projects S&P 500 earnings for 2025 Q4 to rise 6.9% year-over-year on 7.7% higher revenues (after Q3’s 13.9% EPS growth), but the expansion is highly concentrated in Technology and a handful of mega-caps: Tech Q4 EPS are expected to rise 13.0% on 15.8% revenue growth (the 10th straight quarter of double-digit Tech EPS growth), the ‘Magnificent 7’ are forecast to notch +16.6% EPS on +16.2% revenue, and stripping out Tech or the Mag 7 cuts index-wide Q4 EPS growth to roughly +3–3.6%. Revisions for Q4 have recently turned modestly negative overall even as Tech’s estimate trend remains positive into 2026 (Tech is expected to deliver ~17% EPS growth in 2026 and account for ~35.6% of next-four-quarter index earnings while representing ~44.6% of market cap), underscoring that near-term S&P performance and downside risk are heavily dependent on a small number of mega-cap tech names and upcoming earnings/revision flows.

Analysis

Zacks projects S&P 500 2025 Q4 earnings to rise 6.9% year-over-year on 7.7% higher revenues, following Q3’s stronger +13.9% EPS gain on +7.8% revenue, but the headline expansion is heavily concentrated in Technology and a few mega-cap names. The Tech sector alone is forecast to deliver +13.0% Q4 EPS growth on +15.8% revenue (the 10th consecutive quarter of double-digit Tech EPS growth) and is expected to contribute roughly 35.6% of index earnings over the next four quarters while representing 44.6% of market cap. Excluding Tech, Q4 S&P EPS growth falls to +3.6%, and excluding the ‘Magnificent 7’ the rest of the index is only +3.4%, underscoring earnings concentration in MSFT, NVDA and peers that Zacks highlights. Revisions for 2025 Q4 have recently turned modestly negative overall even as Tech’s estimate trend remains positive into 2026 (Tech 2026 EPS +17.4% on +13.8% revenue), which raises asymmetric downside risk to index-level EPS if Tech results or revisions weaken and limits breadth of the earnings recovery.

Key Decisions for Investors

• Consider selective overweight in high-quality mega-cap Technology names (e.g., MSFT, NVDA) given persistent double-digit EPS and positive revisions, but size positions to control idiosyncratic risk
• Reduce or hedge broad S&P 500 cyclical exposure because core index EPS growth is fragile without Tech/Mag 7 contributions and aggregate Q4 revisions have turned modestly negative
• Monitor upcoming Mag 7 and Tech earnings and the aggregate estimate-revision trajectory as the primary near-term market signal; tighten risk management if Tech revisions rollover
• Avoid increasing exposure to non-Tech mid/small-cap cyclicals until revenue and earnings momentum broadens beyond the Tech sector